Posted on: 30th Jan, 2008 07:22 am
This is a rather bizarre situation. My husband and I purchased a home from a family member over a year ago, made extensive renovations and increased the equity of the home by over 30k making total equity in the home about 50k total. We received a fairly good 30 yr fixed rate despite our credit rating at the time and our mortgage payments were reasonable. However, in December of 2007 we received our billing statement from lender and our mortgage went up over 300.00 a month. Lender explained that they miscalculated taxes, etc. which left escrow in negative balance and subsequently increased monthly payment. All well and good, everybody makes mistakes, right? Well, we are people that budget and our mortgage was part of that budget and a 300.00 increase screwed our budget up royally. We have not gone past due, but are robbing Peter to pay Paul so to speak and forcing other financial obligations to fall 30 days past due in order to keep our mortgage current. We approached the lender to see if they would be willing to defer one months payment in order to resituate our budget after their "calculation error" and they said deferrments are not made on mortgages. OK, great. Next question to them was "What can you do to help us so we dont default on this loan?" The answer we received was "nothing". The media is constantly focusing on the mortgage crisis and urging borrowers to contact their lenders to avoid issues like foreclosures because they are so willing to help people. Both my husband and I work and as I said there is considerable equity in the house, but our lender told us we just dont make enough every month (fall about 300.00 short somehow)for them to make any arrangements with us. Now we have decent paying jobs for the area that we live in, but the principle baffled me. We were not looking for a long term fix, but a short term solution. What about these people that are in dire need of help and on the brink of losing their homes? Is monthly income the only standard on which assistance is based? Because honestly if all people exceeded the monthly income requirements to warrant help would they really be having trouble making their mortgage payments? It seems like a double edged sword and very contradictory. Do they want people to default or are there things that can be done to help that these companies are not always willing to tell people about?
you might be up against a system that is not yet well-schooled enough to recognize your pleas for help.
further, this particular company may have so many issues with other borrowers who are actually past-due that your problem isn't really a problem yet.
in many cases, i believe that lenders have not fully worked out their methods by which help can be arranged. don't forget that all the new things trotted out by bush and various state governments are more or less patch jobs, and not necessarily solutions to long-term problems.
in essence, we really don't know precisely what we are facing.
having said all that, let me make a suggestion. if you have a good shot at negotiating with anyone at all, it may be your other creditors. perhaps renegotiating any loans you may have at present with anyone else (car, personal, etc.) is viable and will enable you to maintain everything. also, credit card issuers are now more likely to be forgiving and make necessary arrangements because they are also facing more and more defaults. clearly, preventing default is paramount for all creditors, but mortgage lenders are more likely to be focused on accounts that are already problems, rather than accounts such as yours (which is, so far, only a problem for you).
i hope this was helpful - i am not trying to apologize for the mortgage industry, but i think there is a big learning curve there.
further, this particular company may have so many issues with other borrowers who are actually past-due that your problem isn't really a problem yet.
in many cases, i believe that lenders have not fully worked out their methods by which help can be arranged. don't forget that all the new things trotted out by bush and various state governments are more or less patch jobs, and not necessarily solutions to long-term problems.
in essence, we really don't know precisely what we are facing.
having said all that, let me make a suggestion. if you have a good shot at negotiating with anyone at all, it may be your other creditors. perhaps renegotiating any loans you may have at present with anyone else (car, personal, etc.) is viable and will enable you to maintain everything. also, credit card issuers are now more likely to be forgiving and make necessary arrangements because they are also facing more and more defaults. clearly, preventing default is paramount for all creditors, but mortgage lenders are more likely to be focused on accounts that are already problems, rather than accounts such as yours (which is, so far, only a problem for you).
i hope this was helpful - i am not trying to apologize for the mortgage industry, but i think there is a big learning curve there.
Hi JOELOPOSKY,
Welcome to the forum.
Most lenders try to help if his client comes and inform him about his problem. I appreciate that you have consulted with your lender about your problem.
It may be that as George has pointed out "preventing default is paramount for all creditors, but mortgage lenders are more likely to be focused on accounts that are already problems, rather than accounts such as yours (which is, so far, only a problem for you). " But you can surely ask him for mortgage modification as you are facing problem. Ask him to make the monthly payments a bit lower by increasing the duration of your mortgage.
Hope that will help.
Feel free to ask if you have any further questions.
Best of luck.
Welcome to the forum.
Most lenders try to help if his client comes and inform him about his problem. I appreciate that you have consulted with your lender about your problem.
It may be that as George has pointed out "preventing default is paramount for all creditors, but mortgage lenders are more likely to be focused on accounts that are already problems, rather than accounts such as yours (which is, so far, only a problem for you). " But you can surely ask him for mortgage modification as you are facing problem. Ask him to make the monthly payments a bit lower by increasing the duration of your mortgage.
Hope that will help.
Feel free to ask if you have any further questions.
Best of luck.
If your home has appreciated are your taxes in jeopardy of rising again? If your home's value has actually declined maybe you could approach your county's assessor and have your taxes reduced.
From your post it appears this debt is legitimately yours, regardless of the miscalculation, which sounds like the supplemental taxes might have kicked in. I'm not sure of your location but here in California taxes are very often billed using the old value until the county has time to recalculate the new tax base. This can take months to years in some counties.
Do you think it is possible either you and/or your husband can find a second job that brings home another $75/week? Are you receiving a tax refund this year? Have you both reduced your amount of tax withholdings from your paycheck minimizing your annual return but maximizing your monthly cash flow? Do you have a room you can rent to a tenant?
Yes, there are services like CCCS that may help to consolidate and negotiate consumer debt reducing rates and payments, but I'm first going to suggest you search for a way to satisfy your debt as agreed. You mentioned "We received a fairly good 30 yr fixed rate despite our credit rating at the time," which alludes to you possibly not having good credit prior to owning the home. Although you are people that budget, do you think that your budget may possibly be too tight? From what you wrote I can't see that your situation is dire. Maybe you have other factors that didn't get mentioned, like an unexpected family health problem, job loss, etc.
My sincerest apologies if this is taken as an affront, it is not intended as such. There will be many people reading your post that are upside down in their equity, have lost their jobs, are getting divorced, or have some situation that doesn't include a reasonable fixed rate and $50,000 in equity. You may want to consider selling your home, paying off debt, and either purchase a less expensive home or rent for a while.
I'm hoping you situation is temporary and you find a speedy recovery.
Best regards,
From your post it appears this debt is legitimately yours, regardless of the miscalculation, which sounds like the supplemental taxes might have kicked in. I'm not sure of your location but here in California taxes are very often billed using the old value until the county has time to recalculate the new tax base. This can take months to years in some counties.
Do you think it is possible either you and/or your husband can find a second job that brings home another $75/week? Are you receiving a tax refund this year? Have you both reduced your amount of tax withholdings from your paycheck minimizing your annual return but maximizing your monthly cash flow? Do you have a room you can rent to a tenant?
Yes, there are services like CCCS that may help to consolidate and negotiate consumer debt reducing rates and payments, but I'm first going to suggest you search for a way to satisfy your debt as agreed. You mentioned "We received a fairly good 30 yr fixed rate despite our credit rating at the time," which alludes to you possibly not having good credit prior to owning the home. Although you are people that budget, do you think that your budget may possibly be too tight? From what you wrote I can't see that your situation is dire. Maybe you have other factors that didn't get mentioned, like an unexpected family health problem, job loss, etc.
My sincerest apologies if this is taken as an affront, it is not intended as such. There will be many people reading your post that are upside down in their equity, have lost their jobs, are getting divorced, or have some situation that doesn't include a reasonable fixed rate and $50,000 in equity. You may want to consider selling your home, paying off debt, and either purchase a less expensive home or rent for a while.
I'm hoping you situation is temporary and you find a speedy recovery.
Best regards,
